ServiceNow Earnings Lifted by AI Momentum
ServiceNow earnings showed Q2 subscription revenue above consensus and raised guidance as AI passed $1.0 billion ACV likely boosting investor flows.
KEY TAKEAWAYS
- Subscription revenue was $3.9 billion and full-year subscription guidance rose to $15.8 billion.
- AI business crossed $1.0 billion in annual contract value, underscoring AI-driven demand.
- cRPO was $13.2 billion and 123 transactions over $1 million signaled stronger large-deal activity.
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ServiceNow Inc. (NYSE: NOW) reported second-quarter results in a press release on July 22, 2026, posting subscription revenue above consensus. The company raised full-year subscription guidance and highlighted its AI business crossing a major annual contract value milestone, signaling strong demand.
Quarterly Results and Guidance
ServiceNow’s subscription revenue for the quarter ended June 30 rose 24.5% year over year to $3.877 billion, increasing 23.0% in constant currency. Total revenue grew 24.0% to $3.987 billion, up 22.5% in constant currency. Profitability metrics included non-GAAP earnings per share of $0.90 and GAAP EPS of $0.29.
The company raised its full-year 2026 subscription revenue guidance to a range of $15.760 billion to $15.780 billion, lifting the bottom end by $25 million and the top end by $5 million from the prior range. Current remaining performance obligations (cRPO) reached $13.20 billion, up 21.0% year over year and 21.5% in constant currency. Total remaining performance obligations (RPO) stood at $29.0 billion, up 21.0% and 22.0% in constant currency.
Prior-quarter transcript materials had set Q2 subscription revenue guidance at $3.815 billion to $3.820 billion and cRPO growth guidance at 19.5% in constant currency, with 125 basis points of both tied to the Armis acquisition. The same materials projected a non-GAAP operating margin of 26.5%, including a 125-basis-point headwind from Armis.
AI and Bookings Momentum
ServiceNow said its AI business surpassed $1 billion in annual contract value during the quarter. Large-deal activity included 123 transactions exceeding $1 million in net new annual contract value, a nearly 40% increase year over year. The company ended the quarter with 658 customers carrying more than $5 million in annual contract value, up about 23% from a year earlier.
The company presented these figures as evidence of strong demand momentum. Secondary coverage attributed the raised outlook and stronger results to growing demand for AI-powered software.
This strength emerged despite cautious pre-earnings commentary from some peers flagging delayed software orders. The combination of expanded AI contracts and robust bookings underpinned the raised guidance, though near-term market reactions may vary.
"ServiceNow's exceptional Q2 results solidify our position as the fastest-growing major enterprise software and cybersecurity company," the company said in its release.
